May 2018

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The Directors of Cavalier Corporation report an audited profit after tax for the year to 30 June 2011 of $18.2 million, an increase of 60% on the $11.4 million the previous year.

However, because the results as reported are affected by the accounting adjustments to deferred tax as a consequence of the further changes to the rules on depreciation of building and fit-outs for tax purposes - with this year's adjustment giving rise to a credit of $0.9 million to profit, compared with the previous year's $5.3 million charge - they do not reflect the actual underlying earnings of the Group.

Without these one-off non-cash accounting adjustments, the Group's normalised tax-paid earnings are $17.3 million, an increase of 4% on the $16.6 million the previous year and at the top end of the $15.8 to $17.5 million earnings guidance range previously provided to the market.

Group revenue for the year was $229 million, an increase of 4% on the previous year, with strong performances by our Australian operations. As a result, they now account for 57% of total revenue, compared with 54% the previous year.

The 4% increase in normalised earnings was largely the result of the better market conditions in Australia which helped offset the subdued market conditions encountered in New Zealand.

Financial Position
Total assets of the Group as at 30 June 2011 were $216 million, an increase of $25 million on the previous year. $21 million, or 84%, of this increase relates to higher inventory values caused, in the main, by the substantial 80% lift in wool prices over the year and to the additional inventory to support higher activity levels in our carpet tile operation. As a result, cash flow from operating activities was substantially reduced to $4.3 million for the year.

Shareholders' equity as at 30 June 2011 was $99.3 million - up $7.8 million on the previous year, mainly from increased retained earnings.

Net interest-bearing debt increased by $16.5 million to $66.3 million to give a gearing (expressed as debt over equity) of 67% as at 30 June 2011, versus 55% the previous year. Despite this higher level of net interest-bearing debt, the Group's financial position remains strong and well within its banking covenants.